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on Labor Markets - Supply, Demand, and Wages |
| By: | Woessmann, Ludger (University of Munich) |
| Abstract: | The multitude of tasks performed in the labor market requires skills in many dimensions. Traditionally, human capital has been proxied primarily by educational attainment. However, an expanding body of literature highlights the importance of various skill dimensions for success in the labor market. This paper examines the returns to cognitive, personality, and social skills as three important dimensions of basic skills. Recent advances in text analysis of online job postings and professional networking platforms offer novel methods for assessing a wider range of applied skill dimensions and their labor market relevance. A synthesis and integration of the evidence on the relationship between multidimensional skills and earnings, including the matching of skill supply and demand, will enhance our understanding of the role of human capital in the labor market. |
| Keywords: | skills, human capital, education, labor market, earnings, tasks, cognitive skills, personality, social skills, multidimensional skills |
| JEL: | J24 I26 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17395 |
| By: | Stefania Albanesi; Wabitsch Alena; António Dias da Silva; Juan F. Jimeno; Ana Lamo |
| Abstract: | We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011-2019. Using data for occupations at the 3-digit level, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between relative wages across occupations and potential exposures to new technologies |
| Keywords: | Artificial intelligence; Employment; Occupations; Skills |
| JEL: | J23 O33 |
| Date: | 2024–11–18 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmoi:99164 |
| By: | Anger, Silke (Institute for Employment Research (IAB), Nuremberg); Bassetto, Jacopo (University of Bologna); Sandner, Malte (Technische Hochschule Nürnberg) |
| Abstract: | While Western countries worry about labor shortages, their institutional barriers to skill transferability prevent immigrants from fully utilizing foreign qualifications. Combining administrative and survey data in a difference-in-differences design, we show that a German reform, which lifted these barriers for non-EU immigrants, led to a 15 percent increase in the share of immigrants with a recognized foreign qualification. Consequently, non-EU immigrants' employment and wages in licensed occupations (e.g., doctors) increased respectively by 18.6 and 4 percent, narrowing the gaps with EU immigrants. Despite the inflow of non-EU immigrants in these occupations, we find no evidence of crowding out or downward wage pressure for natives. |
| Keywords: | skill transferability, occupational recognition, immigrant integration |
| JEL: | J24 J31 J62 F22 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17444 |
| By: | Keefer, Quinn (California State University San Marcos); Kniesner, Thomas J. (Claremont Graduate University) |
| Abstract: | Our research interest is in the existence and size of possible peer effects in pay or whether a worker may get a higher salary because another worker does rather than being related to a change in the worker’s productivity or market forces. Previous research, which has concentrated on executive pay, suffers from the inability to control for labor market forces. We net out market forces by studying a group of particular U.S. pro football players who are subject to a tightly budgeted unionized institutional arrangement affecting certain players pay set in the offseason. Our empirical results for NFL wide-receivers and cornerbacks during 2013-2022 are that there is an elasticity of average contract value with respect to the largest contract already signed in the offseason of about 0.17. Players we study who sign the largest contract during the offseason at the time of signing generate significant pay spillovers to players signing subsequent offseason contracts, suggesting that their compensation is economically and statistically significantly impacted by peer group reference points. |
| Keywords: | labor market reference point effects, NFL player pay, fixed effects, quantile regression, influence analysis |
| JEL: | J31 J33 Z21 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17440 |
| By: | Dietmar Harhoff; David Heller; Paul P. Momtaz |
| Abstract: | We show that firm and industry, rather than inventor and invention factors, explain more than half of the variation in inventor returns in administrative employer-inventor-patent-linked data from Germany. Between-firm variation in inventive rents is strongly associated with inventor mobility. Inventors are more likely to make a move just before a patent is filed than shortly thereafter and benefit from their move through a mobility-related marginal inventor return. Employers that pay inventor returns in excess of the expected return gain a favorable position in the market for inventive labor with subsequent increases in patent quality and quantity. Consistent with theoretical arguments, effect sizes also depend on employer-inventor technological complementarity, degree of competition, and invention quality. |
| Keywords: | inventor returns, labor mobility, patents, inventive productivity |
| JEL: | O31 J24 J62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11449 |
| By: | Adamopoulou, Effrosyni (ZEW); Cao, Yaming (ZEW); Kaya, Ezgi (Cardiff University) |
| Abstract: | We use the National Longitudinal Study of Adolescent to Adult Health to explore how high school peers' grit, a personality trait characterized by perseverance and passion, influences long-term outcomes. Exploiting random variation within schools across cohorts, we find that peer grit significantly increases future earnings, especially for students from disadvantaged backgrounds. We identify two key mechanisms: an increased likelihood of employment in jobs aligned with career goals and a reduced probability of feeling overwhelmed by difficulties. Additionally, peer grit leads to higher job satisfaction and asset accumulation. Thus, peer grit's effects extend beyond short-term educational performance and persist into adulthood. |
| Keywords: | grit, peer effects, long-term outcomes, Add Health |
| JEL: | I24 J13 J24 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17446 |
| By: | Jack Fisher |
| Abstract: | Many workers provide services for customers via digital platforms that may exert monopsony power. Typical expositions of this phenomenon are inapplicable because platforms post prices to both sides of a two-sided market, and platform-specific labor supply is hard to measure when workers multi-app. This paper develops a model of a typical gig labor market that deals with these issues. Platforms exploit monopsony power to markup their commission rate and reduce equilibrium wages. A worker union sets the first-best commission rate when the customer market is competitive. I estimate the model using public data, including causal estimates from the literature on Uber’s US ridesharing marketplace. The results imply the platform exploits labor market power to depress drivers’ earnings but faces competition for passengers. An optimally set commission cap raises wages by 14 percent, but minimum wages on utilized hours harm workers. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11444 |
| By: | Margarita Almyranti; Eric Sutherland; Dr. Nachman Ash; Samuel Eiszele |
| Abstract: | Healthcare has progressed through advancements in medicine, leading to improved global life expectancy. Nevertheless, the sector grapples with increasing challenges such as heightened demand, soaring costs, and an overburdened workforce. Factors contributing to health workforce strain include ageing populations, increasing burden from non-communicable and chronic diseases, healthcare providers’ burnout, and evolving patient expectations. Artificial Intelligence (AI) could potentially transform healthcare by alleviating some of these pressures. But AI in health poses risks to health providers through potential workforce disruption – with changing roles requiring adapted skills with some functions subject to automation. Striking a balance between innovation and safeguards is imperative. |
| Keywords: | Artificial Intelligence, Doctors, Health, Health Data, Innovation, Medical Care, Productivity, Research, Skill Building, Technology, Training, Workforce |
| JEL: | I1 I10 I15 J21 J24 O33 |
| Date: | 2024–11–20 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:28-en |
| By: | Sabrina Di Addario; Zhexin Feng; Michel Serafinelli |
| Abstract: | This paper presents direct evidence on how firms’ innovation is affected by access to knowledgeable labor through co-worker network connections. We use a unique dataset that matches patent data to administrative employer–employee records from "Third Italy"—a region with many successful industrial clusters. Establishment closures displacing inventors generate supply shocks of knowledgeable labor to firms that employ the inventors’ previous co-workers. We estimate event-study models where the treatment is the displacement of a "connected" inventor (i.e., a previous coworker of a current employee of the focal firm). We show that the displacement of a connected inventor significantly increases connected inventors’ hiring. Moreover, the improved access to knowledgeable workers raises firms innovative activity. We provide evidence supporting the main hypothesized channel of knowledge transfer through firm-to-firm labor mobility by estimating IV specifications where we use the displacement of a connected inventor as an instrument to hire a connected inventor. Overall, estimates indicate that firms exploit displacements to recruit connected inventors and the improved capacity to employ knowledgeable labor within the network increases innovation. |
| Keywords: | social connections, firm-to-firm labor mobility, patents, establishment closure |
| JEL: | J60 O30 J23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11432 |
| By: | Börschlein, Erik-Benjamin (Institute for Employment Research (IAB), Nuremberg); Bossler, Mario (Institute for Employment Research (IAB), Nuremberg); Popp, Martin (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | Labor market tightness tremendously increased in Germany between 2012 and 2022. We analyze the effect of tightness on wages by combining social security data with unusually rich information on vacancies and job seekers. Instrumental variable regressions reveal positive elasticities between 0.004 and 0.011, implying that higher tightness explains between 7 and 19 percent of the real wage increase. We report greater elasticities for new hires, high-skilled workers, the Eastern German labor market, and the service sector. In particular, tightness raised wages at the bottom of the wage distribution, contributing to the decline in wage inequality over the last decade. |
| Keywords: | labor market tightness, wages, labor shortage, occupations, wage inequality |
| JEL: | J31 J63 J64 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17447 |
| By: | Esteban M. Aucejo; Spencer Perry; Basit Zafar |
| Abstract: | Balancing the demands of work and schooling is a challenging task for an increasing number of students who have to pay their way through college and for workers who intend to upgrade their skills. However, flexible learning and working environments could play an important role in easing many frictions associated with performing both activities simultaneously. Using detailed (work and study effort) data - from a partnership between Arizona State University and Uber that allows eligible drivers to enroll in online college courses for free - we analyze how labor supply and study efforts respond to changes in labor market conditions and college activities/tasks. Our findings indicate that a 10% increase in average weekly online college activities reduces weekly time spent on the Uber platform by about 1%, indicating a low 'short run' opportunity cost of studying when working. We also show that study time is not particularly sensitive to changes in labor market conditions, where a 10% increase in average weekly pay reduces study hours by only 2%. Consistent with these results, we find that workers take advantage of their flexible schedules by changing their usual working hours when their college courses are more demanding. We do not find adverse effects of work hours on academic performance in this context, or of study hours on workplace performance (as measured by driver ratings or tips). Finally, the (elicited) value assigned to flexible working and educational formats is high among the students in our sample, who view online education as an important vehicle for increasing expected future income. Overall, this study underscores that combining flexible working and learning formats could constitute a suitable path for many (low-SES) students who work to afford an increasingly expensive college education and for workers aiming to improve their skill set. |
| Keywords: | gig economy, education, flexible working |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2052 |
| By: | Schroeder, Christofer; Hviid, Simon Juul |
| Abstract: | Contractions in credit supply can lead firms to reduce their level of employment, yet little is known about how these shocks affect the composition of firms’ employees and outcomes at the worker level. This paper investigates how bank distress affects credit provision and its effects on employment beyond firm-level aggregates. To do so, we use a novel dataset built from administrative and tax records linking all banks, firms, and workers in Denmark. We show that banks that were particularly exposed to the 2008-09 financial crisis cut lending to firms, and firms were unable to fully compensate with financing from alternate sources. The decrease in credit supply led to a drop in firm-level employment, with effects concentrated among firms with low pre-crisis liquidity, and on employment of low-educated and nonmanagerial workers. At the worker level, we find that positive effects on unemployment were driven by effects on low-educated, non-managerial and short-tenured workers. Our estimates suggest that cuts in bank lending can account for at least 5% of the fall in employment of low-educated workers in our sample, and are an important factor behind heterogeneous employment dynamics in times of contractionary credit. JEL Classification: E24, E44, G01, G21, J23 |
| Keywords: | bank lending, financial crisis, firm borrowing, labour demand |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20243001 |
| By: | Christina Brinkmann (University of Bonn) |
| Abstract: | I study how firms’ labor hoarding, driven by their reliance on firm-specific human capital, affects their hedging of other business risks. Leveraging German administrative data on short-time work, combined with matched employer-employee data and firm financial information, I develop a firm-level measure of hoarded labor. I formalize the hypothesized risk trade-off in a stylized model featuring demand uncertainty and uncertainty around an unrelated price risk that can be hedged at a cost. Empirically, labor-hoarding firms exhibit larger comovements of their cash flows (CF) with demand fluctuations, illustrating the upside potential of hoarded labor functioning as a capacity increase. However, labor hoarding is not linked to higher overall CF volatility; instead, it is linked to reduced foreign-exchange (FX) risk as one specific price risk. FX risk can substantially contribute to CF volatility, especially for smaller, globally exporting firms that are sensitive to the driving forces of labor hoarding suggested by the model: idiosyncratic demand risk and reliance on firm-specific human capital. I instrument hoarded labor with proxies for firm-specific human capital and find that firms hedge their FX risk more in response to greater labor hoarding. These findings offer a new perspective on firms’ willingness to assume risk in the context of labor market rigidities and institutions. |
| Keywords: | Labor hoarding, human capital, risk management, FX risk |
| JEL: | J01 J24 G00 G32 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:343 |
| By: | Danielle Li; Lindsey Raymond; Peter Bergman |
| Abstract: | This paper views hiring as a contextual bandit problem: to find the best workers over time, firms must balance exploitation (selecting from groups with proven track records) with exploration (selecting from under-represented groups to learn about quality). Yet modern hiring algorithms, based on supervised learning approaches, are designed solely for exploitation. Instead, we build a resume screening algorithm that values exploration by evaluating candidates according to their statistical upside potential. Using data from professional services recruiting within a Fortune 500 firm, we show that this approach improves the quality (as measured by eventual hiring rates) of candidates selected for an interview, while also increasing demographic diversity, relative to the firm's existing practices. The same is not true for traditional supervised learning based algorithms, which improve hiring rates but select far fewer Black and Hispanic applicants. Together, our results highlight the importance of incorporating exploration in developing decision-making algorithms that are potentially both more efficient and equitable. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.03616 |
| By: | Fleming, Owen; Singh, Tejendra Pratap; Yusuff, Olanrewaju |
| Abstract: | Using multiple survey waves of the American Time Use Survey, we demonstrate that online sports betting legalization had spillover effects on how people spend their time on various activities. We show that time spent on leisurely activities increases postlegalization driven by an increase in time spent on consuming mass media and socialization. The heterogeneity analysis highlights that young male time reallocation is more pronounced. The estimates are robust to multiple empirical checks. |
| Date: | 2024–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:nxg6y |
| By: | Yulia Evsyukova; Felix Rusche; Wladislaw Mill |
| Abstract: | We assess the impact of discrimination on Black individuals’ job networks across the U.S. using a two-stage field experiment with 400+ fictitious LinkedIn profiles. In the first stage, we vary race via AI-generated images only and find that Black profiles’ connection requests are 13 percent less likely to be accepted. Based on users’ CVs, we find widespread discrimination across social groups. In the second stage, we exogenously endow Black and White profiles with the same networks and ask connected users for career advice. We find no evidence of direct discrimination in information provision. However, when taking into account differences in the composition and size of networks, Black profiles receive substantially fewer replies. Our findings suggest that gatekeeping is a key driver of Black-White disparities. |
| Keywords: | discrimination, job networks, labor markets, field experiment |
| JEL: | J71 J15 C93 J46 D85 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11433 |